Mobile number portability to spark new price wars

Kenyan telecom companies are bracing for an increase in customer migration and the possibility of price wars when the proposed mobile number portability becomes a reality in a few months.

Speaking separately to The EastAfrican, the four operators — Safaricom, Zain, Orange and Yu — have indicated that they will start positioning themselves for the technology in such a way that it makes a positive difference for their subscribers.

“The move by the industry regulator is welcome and we are ready to embrace it,” said Michael Joseph, Safaricom CEO.

“Number portability intends to increase ‘churn’ rates since it gives consumers the ability to change service providers without changing their mobile phone numbers.”

Service Provider Number Portability is a service that gives a mobile subscriber the option of retaining his/her mobile phone number even after switching to a different network, providing them the flexibility to migrating with their numbers to any network and operators to continuously improve the quality and prices of their services in order to retain and attract more customers.

However, experts have cautioned that the threat for operators is that regulators may use it as a tool to force tariffs down in a low income-earning market and create opportunities to license more operators.

South Africa, which was the first market and the benchmark for number portability in Africa, has experienced a marketing frenzy as rival operators sought to outmanoeuvre each other with cheaper and more innovative packages, forcing tariffs down.

Studies also show that subscribers in countries where handset subsidies are prevalent are likely to form part of a “grab and go” trend, joining one operator for a new, trendy phone and then migrating to another that offers the best pricing or most attractive services.

But while this looks enticing to mobile phone users in Kenya, the operators are also cautioning that the proposed number portability is fraught with risk.

“Zain Kenya supports the eventual introduction of number portability into the Kenyan market but does not view it as being feasible in the Kenyan market today due to various factors such as the high implementation costs, low rural mobile penetration and relatively low cost of obtaining a sim card in the predominantly pre-paid market,” said Rene Meza, the company’s managing director.

In much of Africa, however, voice remains the most popular means of communication and only two things matter to the average consumer — cheap calling rates and flashy handsets.

While handsets may take off among a few of the postpaid subscribers in Kenya, the majority is on prepaid packages and will most likely follow the operators with the cheapest tariffs.

Mr Meza says subscribers usually churn if they are unhappy with an operator’s customer care, service portfolio or tariff rates: “For that reason, building a strong brand and forging close relationships with existing customers are the fundamentals in overcoming churn.”

Concurring with Safaricom’s Mr Joseph, Mr Meza says number portability will lead to high implementation costs for the operators, including equipment costs.

Operators will have to consider carrying out a comprehensive cost-benefit analysis to ascertain whether the implementation of the technology proves to be profitable for the operator.